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OPINIONOperations

3 anvils hanging over restaurateurs’ heads

Photograph: Shutterstock

reality-check

Ah, the good ol’ days of 2018! Bankruptcies by the dozens! Disgruntled shareholders insisting they should run the company! Food poisonings! Customers staying home! Twenty percent commissions for third-party deliveries!

We’ll give you a second to dab away tears of joyful reminiscence before considering the realities that could make 2019 less of a teddy bear hug.

This, after all, is the year when the industry will discover whether the traffic shortages of 2017 and ’18 were blips or an irrefutable sign of the business’ maturity—“maturity” being a more pleasant term for “past the easy-living stage and well into an era of perpetual shin kicks.” 

Prognosticators are wishy-washy about what the restaurant industry can expect in the new year. If there’s a consensus, it’s that 2019 won’t be a sharp departure from the year that just closed. It may well be like divorcing your wife and marrying her twin sister.

We’re shimmying out on a limb and predicting the business will be tougher in 2019. That’s close to forecasting darkness tonight for most areas of the country, given that a canvass of U.S. economists found two-thirds of them expect the economy to slide into recession during 2020.

To be sure, good things lie ahead for solid operators, a result in part of not-so-solid poseurs being driven out by the challenges. Most experts expect delivery, the industry’s salvation in 2018, to become even more of a sales driver this year. Employment is also up, which means consumers have less time to prepare dinner and more money to buy someone else’s kitchen handiwork.

But it’s these issues that really have us concerned:

Overtime rules will finally be updated.

The industry was spared a major blow to profits when the Trump administration delayed adoption in 2016 of new yardsticks for determining when salaried restaurant personnel are entitled to time-and-a-half pay after working 40 hours a week. Right now, anyone earning a salary of more than $23,660 annually isn’t entitled to overtime, since that’s the threshold determining who’s in management and exempted from the higher pay scale. The plan called for raising the threshold to $47,476, a change that would have cost restaurant employers an additional $5 billion annually, according to the National Council of Chain Restaurants. 

Truth be told, the old threshold just isn’t feasible today. Doubling the trigger level in one jump isn’t pragmatism at its best, either. But the number has to go up, and will likely rise appreciably, despite Trump’s proven pro-business orientation. The exact scope of the increase was expected to be revealed in October, but the Department of Labor decided to conduct a series of hearings nationwide to determine what would be fair. There’s no way it won’t be significant.

Cannabis will worsen the labor situation.

Michigan will soon join the ranks of states selling marijuana for recreational use, another step toward legal consumption nationwide. As Reality Check has asserted before, this will ultimately be a good thing for the restaurant business, providing a new draw on par with wine, beer or the best of mixology. But there’s one major drawback that parts of the industry are likely already feeling: competition for labor. In Canada, where smoking weed is now legal nationwide, pot-related businesses are hiring employees at an average annual income in U.S. dollars of about $46,000, about a $4,000 premium over the national average pay rate, according to the Canadian government.  On an hourly basis, that breaks down to $22 an hour, compared with a national average for U.S. restaurant workers of about $14, according to a variety of sources.

The boom north of the border is likely already drawing prospective U.S. restaurant hires to expatriate. And if the situation there is a reliable indicator of what’s in store for the U.S., restaurateurs will see another quantum leap in pay, after watching rates soar in 2018.

Disposable coffee cups will be 2019’s plastic straws.

Inexpensive single-use coffee cups may be the next restaurant staple to be demonized the way plastic drinking straws were blasted as unacceptable environmental hazards in 2018. Coming up with a replacement to one-and-done containers will likely be harder than dropping straws, given the functional and cost benefits of the standard disposable cup. But explorations are already underway.

In Boulder, Colo., consumers can already walk out of some cafes with a permanent-ware coffee cup. When they’re done, they return it to another participating cafe, which has the containers collected and sanitized by a third party called Vessel Works. Proponents say the cost to participating restaurants is less than the price of disposable cups on a per-use basis, because each shared cup is used multiple times.

Costa Coffee, a U.K. rival to Starbucks, is providing smart cups that do the work of a smartphone app.  The container itself records how much money is loaded into the customer’s account, along with the bearer’s standard order and other customer info.

It makes the vessel worth keeping, and never mind its anvil-repelling qualities.

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